Doyle, Presiding Judge. Scapa Dryer Fabrics, Inc. purchased annual liability insurance policies from National Union Fire Insurance Company of Pittsburgh, PA and New Hampshire Insurance Company for coverage for claims of injurious exposure to Scapa’s asbestos-containing dryer felts. Scapa sued both companies, seeking a declaratory judgment and asserting breach of contract claims after disputes as to coverage limits and inclusion of litigation costs in those limits. The parties filed cross-motions for partial summary judgment, and the trial court granted the motions in part and denied them in part. In Case No. A18A1173, the defendants appeal, arguing that the trial court erred by ruling that: (1) the non-cumulation provisions in certain National Union policies are ambiguous, and therefore, Scapa can “stack” the limits of each primary policy; and (2) the New Hampshire excess policy is obligated to defend and indemnify Scapa upon exhaustion of all primary policies that overlapped in time with the excess policy periods, as opposed to until after exhaustion of every primary policy issued to Scapa for any time period. In Case No. A18A1174, Scapa appeals, arguing that the trial court erred by concluding that defense costs erode the policy limits of the 1986 and 1987 National Union policies. We have consolidated the appeals for review, and for the reasons that follow, we affirm in Case No. A18A1173, and we reverse in Case No. A18A1174.“On appeal from the grant of summary judgment this [C]ourt conducts a de novo review of the evidence to determine whether there is a genuine issue of material fact and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.”[1] So viewed, the record shows that from 1958 to 1976, Scapa manufactured and sold, among other things, asbestos-containing dryer felts, which were used in producing paper. For the period from 1983-1987, Scapa purchased five consecutive primary annual policies from National Union, which policies obligate National Union (a) to pay on behalf of Scapa “all sums” which Scapa “shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence . . .” and (b) “to defend any suit against [Scapa] seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false[,] or fraudulent. . . .”[2] The 1983, 1984, and 1985 National Union policies have limits of $1 million for each occurrence and $1 million in the aggregate. For the 1986 and 1987 renewal policies, the liability limits were amended by two endorsements — one which sets the total liability limit for “Ultimate Net Loss” resulting from any one occurrence to $7.2 million, and another which contains a non-cumulation provision. Scapa also purchased annual liability coverage from New Hampshire, National Union’s sister company. The New Hampshire policy was initially issued for the period from March 31, 1983, through March 30, 1984 (“the 1983 policy”), and it was then renewed for the next four years. With limited exceptions not relevant to this appeal, the renewal endorsements only amended the limits of liability.In April and August of 2014, Resolute Management, Inc. — the third-party administrator and claims handler for National Union with respect to the relevant asbestos claims — advised Scapa that it was close to exhausting what National Union contended were its $7.2 million policy limits. National Union took the position that under the non-cumulation provisions contained in the 1986 and 1987 policies, liability was capped at $7.2 million, rather than the $17.4 million aggregate coverage of all five policies. National Union also counted defense costs against policy limits.[3] On November 6, 2014, Resolute advised Scapa that the limits of liability for all National Union policies had been exhausted. Scapa sued National Union in 2014, and it later added New Hampshire as a defendant. In the second amended complaint, Scapa sought a declaratory judgment and damages for breach of contract based upon the defendants’ discontinuation and denial of insurance claims. The defendants asserted counterclaims for declarations regarding coverage and limits of coverage. The parties then filed cross- motions for summary judgment, and the trial court granted the motions in part and denied them in part, holding that: (a) the non-cumulation provision in the National Union policies is ambiguous, and therefore, Scapa can “stack” the limits of each primary policy; (b) New Hampshire’s obligations under the excess policies are triggered by exhaustion of the National Union primary policies covering the same policy periods; and (c) defense costs erode the policy limits of the 1986 and 1987 National Union policies. These appeals followed.[4]When considering appeals involving insurance contract interpretation, we are guided by the following principles: Construction and interpretation of an insurance policy are matters of law for the court. An insurance policy is a contract and subject to the ordinary rules of contract construction, and the parties are bound by its plain and unambiguous terms. However, if a provision of an insurance contract is susceptible of two or more constructions, even when the multiple constructions are all logical and reasonable, it is ambiguous, and the statutory rules of contract construction will be applied.[5]
Under these rules,any ambiguities in the contract are strictly construed against the insurer as drafter of the document; any exclusion from coverage sought to be invoked by the insurer is likewise strictly construed; and the insurance contract is to be read in accordance with the reasonable expectations of the insured where possible. When applying these rules, the policy must be considered as a whole and each provision is to be given effect and interpreted so as to harmonize with the others.[6]
